Sri Lanka’s current government lead by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe in coalition that has the Finance Minister as Mangala Samaraweera expects the real Gross Domestic Product (GDP) to grow by 3.5% in 2019, as per the recently released Budget 2019’s forecasts, a report highlights. In the recently released Sri Lanka’s International Sovereign Bond (ISB) offering document to international investors points out that the Budget forecasts real GDP growth of approximately 3.5% in 2019. The report also states that the Government expects Parliament to approve the budget by the first week of April 2019.

“The Government forecasts that the budget deficit will reduce to 2.0% by 2024” the report notes to investors.

The ISB offering document further outlines that the Government’s budget for 2019 was presented to the Parliament on March 5, 2019 and the broad theme of the Budget 2019 has been set out as “Enterprise Sri Lanka-Empowering the people and Nurturing the Poor”.

“Accordingly, the Budget 2019 (the “Budget”) aims at achieving economic growth led by private enterprises and a liberalized outward oriented economy while empowering the people with a strong and well-targeted social safety net. Meanwhile, fiscal operations are expected to improve in 2019, with the expected overall fiscal deficit being 4.4% of GDP, a decrease from 5.3% of GDP recorded in 2018” the ISB offering document further outlines.

Sri Lanka raised nearly US $ 2.4 billion on 7^th March 2019 soon after the Budget proposals were presented for 2019. The two bonds US $ 1 billion at 6.85% interest per annum is due 2024 and the US $ 1.4 billion at 7.85% interest per annum is due 2029. For two Bonds the final orderbook stood at total of over US $ 7.5 billion, which was at over US $ 2.7 billion across 190 accounts for the 5-year tranche and over US $ 4.8 billion across 252 accounts for the 10-year tranche – clearly reflecting global investors' continued confidence and positive outlook on Sri Lanka’s economic growth story. The 2024 Bonds will mature at par on March 14, 2024, and the 2029 Bonds will mature at par on March 14, 2029. Interest on the Bonds will be payable semi-annually in arrears on March 14 and September 14 of each year commencing on September 14, 2019. The Bonds are not redeemable prior to maturity. Except as described in the offering document, payments on the Bonds will be made without deduction for or on account of withholding taxes imposed by Sri Lanka. The Bonds will constitute direct, unconditional, unsubordinated and unsecured general obligations of the Issuer. According to ISB offering document, the Bonds will at all times rank pari passu among themselves in all respects, without any preference of one over the other by reason of priority of date of issue or otherwise. The Bonds will at all times rank at least equally with all other present and future unsecured and unsubordinated External Indebtedness of the Issuer. The full faith and credit of the Democratic Socialist Republic of Sri Lanka will be pledged for the due and punctual payment of the principal of, and interest on, the Bonds, according to the document.

- Reporting by Devendra Francis